Auto insurance premiums spike in South Carolina as crashes increase and repair bills swell
As more sensors and cameras become part of a vehicle’s makeup, repairs can become more costly. Paint and body prepper William Smithey repairs a front bumper at Rick Hendricks BMW on Tuesday. Wade Spees/Staff
Traffic fills Interstate 526 toward Westmoreland Bridge over the Ashley River on Tuesday. Congestion across the country has gotten worse as the economy has improved and more people have gotten back to work. In South Carolina, experts say that’s led to more wrecks — and higher insurance premiums. Wade Spees/Staff
South Carolina drivers are getting in more wrecks, the damage is getting more expensive to repair, and the state’s auto insurers are starting to pass along the bill.
In short, that’s the confluence of factors causing insurance premiums in the Palmetto State to spike after creeping up gradually throughout the economic recovery.
Auto premiums are jumping across the country thanks to a robust economy that’s put more drivers on the road and an influx of new technology that’s made cars more expensive to fix. And the phenomenon appears to be especially pronounced in South Carolina, where a long stretch of better-than-average job growth, a fast-growing population and a high rate of crashes have pinched insurers’ profits.
The state’s 10 largest auto insurers increased premiums an average of 8.9 percent last year, according to the S.C. Department of Insurance, more than double the rate of change they recorded in 2015. That came as the gap between what carriers take in and what they pay out widened: In 2015, insurers paid about $1.11 in claims for every dollar they collected in premiums.
“Our loss experience has not been favorable for several years,” said Roszell Gadson, a spokesman for State Farm, the largest auto insurer in South Carolina. The company raised premiums an average of roughly 12 percent “to better cover expected claims costs,” Gadson said in an email.
The pace of premium increases has sped up in South Carolina in recent years as auto insurers pay out to cover more wrecks and more expensive repairs.
And while those increases are still filtering through renewal notices, insurance experts say there’s little indication that the underlying factors — costlier damage and increasingly frequent crashes — have let up. In each case, the strengthening economy is likely a factor.
For one thing, as Americans’ finances improve and they buy new cars, they’re increasingly opting for advanced safety features that cram cameras, sensors and other costly technological features into parts that were once inexpensive, like bumpers and side mirrors.
“If you tap someone’s bumper now, you’ve taken out cameras and sensors,” said Ray Farmer, the director of the state Department of Insurance.
New technology like blind-spot monitors and lane assistance might help prevent some accidents, but the benefits haven’t been fully realized, said Robert Hartwig, a University of South Carolina professor who until last year ran the Insurance Information Institute.
The average vehicle on American roads is nearly 12 years old, so while new features might help in some cases, they’re not commonplace enough to prevent most wrecks. A car with automatic braking might help prevent a collision, for instance, but if it’s rear-ended by a pick-up truck without it, that feature won’t do much good — and the repairs will be expensive.
“We are at a point right now where the technologies are driving up the cost and are having, on the margins, some favorable impacts in terms of reducing the number of accidents,” Hartwig said. “But those favorable impacts are swamped by the fact that overall in the United States, everybody is driving more.”
And by all accounts, the number of wrecks in South Carolina and across the country is rising.
Opinions vary about what’s causing the increase, and experts say it’s likely a combination of factors, each of them plain enough to see in rush hour traffic: Congestion’s getting worse, smartphones are distracting drivers and people are taking to the road more often.
The number of crashes in South Carolina topped 140,000 last year, according to the S.C. Department of Public Safety. Slightly more than a quarter of the wrecks caused injuries.
That’s not surprising in a strong labor market, since crashes tend to be more frequent when the economy is good. Low unemployment means more commuters headed to work, more capacity to shop and more opportunity to take vacations. More cars on the road, meantime, leads to more congestion and collisions.
All told, nearly 1,000 people were killed on the road across the state — an unusually high toll for a state this size. The 975 deaths last year essentially matched the number of fatalities recorded in 2015, when the state the most deaths per mile driven in the country.
So far, this year is on track to be deadlier still. As of Sunday night, 432 people had died on the state’s highways, according to the Department of Public Safety. That was an increase of 17 fatalities, or 4 percent.
Reach Thad Moore at 843-937-5703 or on Twitter @thadmoore.